Cake/sandwhich shop

A question about : Cake/sandwhich shop

Hi, hope someone can help with this!

My partner and I live in a flat above a cake shop/cafe. We thought the shop was owned by whoever runs it, but it turns out our landlord does and a sign has gone up in the window this weekend saying the shop is up for rent (A3 restaurant).

I make cakes as a hobby, but would love to make it my job to run a cafe/tea room and this seems like an ideal opportunity to start a business, however, as my partner pointed out, here must be a reason the cake shop is closing. It's location is not ideal for a tea room, but it is near offices/businesses and on the same road as our local college. My partner has suggested the idea of turning it into a sandwhich shop.

Does anyone have any experience of running a cafe/sandwhich shop, as we have no clue where to start. We just have a love of food!

TIA

Best answers:

• Why not look at rental/ rates and insurance costs first, see how they look on a weekly/ monthly basis.
  Then add in a wage for your time and effort, add that to your costs.
  Price up your wares, sandwiches, cakes, pasties, how much will it cost to produce, and work out how many you need to sell, at various profit margins to cover the overheads you have calculated.
  Do the numbers balance?
  To my mind, that should be your thinking process to start with.
• Annisele, I do have a little experience working in catering as I used to work as a food & beverage assistant in college/uni. I also completed a food hygiene certificate (I'll have to redo this). My partner and I have a small amount of money saved, but would likely need a bank loan to start up, so I would have to write a business plan.
  Our idea would be to have a small seating area, for tea/coffee and cake, but we would mainly be selling deli style sandwiches etc to take away.
• I agree with the other replies that you need to do your sums carefully and avoid romantic dreams of running a shop.
  Another consideration is what this shop may turn into if the next tenant runs another kind of business there. Living above a quiet and civilised cake shop is very different to a kebab shop open until the early hours.
  In your situation, assuming you don't take the shop on, I would not commit to a renewal of my tenancy until I knew what was happening. You would want to be on a rolling contract and not tied in, just in case.
• maybe have a chat with the current shop owner and see what his reasons are.
• You will probably need to get a guarantor for the bank loan which usually means finding someone with property that they are willing to stake on your business venture. Is it at all possible to do it without a bank loan?
  There has been several threads on people starting cafes and what comes up often is the staffing arrangements. Having continuity of staff can be a challenge if you want to keep staff numbers down to a minimum and staff wages will probably be your biggest outlay.
• A small cafe/sandwich shop is a good way to make a small fortune out of a large one! Most are little more than hobby/lifestyle businesses where you work long hours and only earn a similar amount to working on a supermarket checkout if you're lucky! *Some* are goldmines, but most are dead-ducks. That's why there are always so many for sale and why the closure rate is very high. If the one below you was any good it would have been sold as a going concern and certainly wouldn't have a "to let" sign on it's window!
• Due diligence. Ask for sight of their books and take them to an accountant. Listen to what the accountant says.
  They may be selling because they're making a huge loss. Or they're retiring. Or they've decided it's no longer for them.
  If you took it over, you might also make a huge loss. Or you might find that you can run it at lower cost and people come for miles for your extra special sandwiches.
  Ask yourself this question - if you were going to set up a cafe/cake shop/sandwich shop, is this the location you would choose? Because that's really the only thing that you can't change.
• I've emailed my landlord for more information and he's given me the current cost of rent pcm. He said he would be willing to negotiate on this and can offer some period of free rent.
  He asked what our plans would be and when we said sandwhich shop he thought it was a good idea. He said that the counters/seating would be on the upper level, with the kitchen and toilets on the lower level. I think he would like to discuss things further which sounds promising. The location is good as it's on the same road as our local college and near offices. Plus, there would be a 30 sec commute for me in the mornings
  As someone already mentioned, it could become anything and we might have to find somewhere else to live if we don't like who moves in!
• Pros - commute time, giving it a go
  Cons - all eggs in one basket!!
  That is a real issue by the way. Commercial rents are not the same as domestic, and you might find yourself in a situation where you're compromised on the shop (maybe it doesn't work out for some or other reason) and it sours your landlord relationship for your flat.
  Just make sure you're clear and build terms into your commercial lease that are compatible with your domestic one (ie seek specific legal advice) just in case things get complicated.
• Yes, the rent is only for the shop itself, not the business. The layout of the shop is of a kitchen/cafe, hence opening a sandwich bar.
  I currently work in legal admin, so legal advice should be easy enough to get. I do see your point about our relationship with our landlord though
  I think it's more a case of having a look round the property (we've never really been inside) and working out the cost of refurbishment/redecoration/equiptment etc. and writing a business plan.
• Also look at the competition. Local college is good, but consider how far the students will go to get sandwiches, and what the competition is. If you are considering eat-in food, then think about what would make it attractive to your clientele - students are likely to want free wi-fi and may 'camp' and buy very little. Bear in mind that colleges have long holidays, so if you expect your main customers to be students you have to factor in those long periods when your customer numbers may plummet.
  Think about who your other customers will be and whether you can appeal to both types of customer.
  If your landlord is willing to talk about the lease, consider how long you can commit for. Business leases are typically longer than residential ones, it's often the tenant who has the financial responsibility for maintenance and upkeep, and you will have business rates etc.
  If your landlord is prepared to offer you a sweetener of a rent-free period why is this? is it a case of his knowing that the shop will not be easy to let?
  I would second Annelise's advice to get a job in a similar business first, and get up to date experience of the reality of working in the job. If you do decide to go ahead than make sure you get proper advice including ensuring that there are appropriate break clauses in your lease, and that you know exactly what you would be liable for in a worst-case scenario f your business plans don't work out.
• As someone said running a business is often a romantic ideal, short hours, loads of money and cash when you sell it. Reality is long long hours, no holidays and struggling to pay the bills.
  take your current earnings, add on the costs of the business rent,rates, staff, utilities etc and work out how much you have to earn from the business to have the life style you have now. It might come as a shock. Good luck in what you choose to do.
• We have one near us that makes a fortune from students - he does hot sausages and bacon, roasted pork and the like - and heats up baguettes.
  It started up about three years ago - and i actually drive 15 minutes to shop in that town rather than go the other way on a Saturday because his sausage baguettes start shouting my name about now on a Saturday morning. So it can be done.
  I would though (and I had a retail business for years) - be honest with yourselves. What skills don't you have? Can you do accounts? Money? Do you understand bookkeeping? How to do a business plan?
  Business Link near you may offer courses - when we started we did a free course on marketing, I did a WEETU course for women in business at one point. So, be brutal, what don't you know - and what do you need to.
  Making the sandwiches is the easy bit - paying staff, keeping accounts, keeping tabs on profitability - those things are the hard bits.
  it's easy to run a business that makes a loss, anyone can do it!
  I'll send you a link to the shop near me.
• although you may get small business rate relief - it's discretionary, so they could easily take it away again.